Market Outlook: Will Rising Interest Rates Hurt Stocks?

The question on everyone’s mind is: Will the fed raising rates cause the market to fall? Absolutely not, because such rate hikes would be priced-in long in advance. The fed is very good at telegraphing its intentions to the market. The market tends to react badly only when rate hikes are unexpected and or larger than expected. Even as rates rise, the stock market is going much higher. The fed raised rates numerous time in the 90′s, yet the market kept chugging higher. Rising interest rates didn’t thwart the 2002-2007 bull market either. The long-term bond market (20+ years) will also be unaffected. The yield curve will go from being steep to flat, presenting a very nice arbitrage opportunity should the federal funds rate climb above 4% and stay there. It may be a decade before interest rates get that high though. Usually the fed raises rates a quarter of a point, contiguously, each meeting until the target is met, but there is no rule that prevents the fed from pausing months or even years between rate hikes.

Biotech and healthcare stocks will keep going higher. Aetna, Bluecross, Kaiser, etc. America is over medicated and over prescribed. Hospitals cannot deny the latest, most expensive treatments to everyone, regardless of ability to pay, even if these drugs only add a couple months of survival at $30,000 a month courtesy of the taxpayer. Then you have the mass medication movement for a litany of supposed mental disorders like ADD, ADHD, Autism, Assbergers etc. Mass vaccinations, government mandated healthcare, and employer mandates. Liberty vs. public health: public health wins. Big bio wins. Buy healthcare and hospital stocks.